GEM DIAMONDS ANNOUNCES THE SALE OF THE 196 CARAT AND THE 184 CARAT DIAMONDS FOR US$22.7 MILLION AND A 4.68 CARAT BLUE DIAMOND SELLS FOR A LETŠENG RECORD OF US$155 000 PER CARAT

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25 Nov 2010

Gem Diamonds Limited (LSE: GEMD) (Gem Diamonds) and the Government of the Kingdom of Lesotho are pleased to announce the sale of both the 196 carat and the 184 carat rough white diamonds which were recovered from the Letšeng mine in the second half of 2010 for a total of US$22 736 360 (an average of US$59 833 per carat).

The world's leading diamantaires participated in a Special Tender which closed in Antwerp on 24 November 2010. In a strongly competitive tender the winning bid for both the 196 carat and 184 carat rough white diamonds was made by SAFDICO.

Additionally, at the November 2010 tender for Letšeng's run of mine production, which closed on 18 November, a 4.68 carat rough blue diamond was sold for US$155 000 per carat, the highest price per carat achieved for a Letšeng rough diamond to date. The average price achieved for the November tender (excluding the 196 carat and 184 carat diamonds) was US$2 341 per carat.

Gem Diamonds' CEO, Clifford Elphick commented:

"It is very pleasing that Letšeng's diamonds continue to attract strong prices and I congratulate Safdico on their purchase of these two remarkable diamonds of top colour and outstanding clarity which are testament to the enduring value of the diamonds that Letšeng continues to produce."

For further information:
Gem Diamonds Limited

Clifford Elphick, Chief Executive Officer 
Glenn Turner, Chief Commercial and Legal Officer 
Tel: +44 (0) 203 043 0280

Richard Chetwode, Investor Relations 
Tel: +44 (0) 203 043 0280 
Mob: +44 (0) 759 0064 883

Gem Diamond Technical Services (Pty) Ltd

Sherryn Tedder, Media 
Tel: +27 (0) 11 560 9618 
Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

James MacFarlane 
Tel: +44 (0) 207 861 3864 / +44 (0) 7841 672 831

James Henderson 
Tel: +44 (0) 207 861 3160 / +44 (0) 7774 444 163

Charles Vivian 
Tel: +44 (0) 207 861 3126 / +44 (0) 7977 297 903

About Gem Diamonds:

Gem Diamonds Limited (LSE: GEMD) is a global diamond company that is pursuing a long term growth strategy through targeted acquisitions and the development of its existing assets.

The Company's portfolio comprises producing kimberlite and lamproite mines and development projects. The Company also owns a diamond cutting technology company. Operations and projects are situated in Angola, Australia, Botswana, and Lesotho.

With Letšeng's production of the world's most remarkable white diamonds and Ellendale's production of rare fancy yellow diamonds, Gem Diamonds is focused towards higher value diamonds. This segment of the market is expected to deliver attractive returns.